Trade Week Analysis for 24/09/12

Last week: Trend trading with my TradeSpotting system was pretty quiet this week. This is hardly surprising though after netting over 2200 worth of pips from the first 2 weeks of September. The markets don’t trend continuously and one needs to make hay whilst the sun shines! There were a few signals but I didn’t ever receive the confluence of a number of signals firing together. There was the A/U earlier in the week that netted almost 90, the USD/SGD is closed now but went -40 and an E/U signal went 70 before reversing. Signals from Fri on the G/U (0) and A/U (-30) failed though. The choppiness on the A/U this week perplexed me somewhat so this got me searching for clues and possible answers. My latest 'Epiphany' is detailed below in the A/U section.

This week: I am aware of the dire state of global economic fundamentals but there are bullish signs on nearly all of the charts. I am also aware of the Presidential Election Year bullish 4th quarter factor.

BTW: I've made a brief update to my Stocks: Sept page and will add some more later today as well.

E/U: Price is currently trading within a bullish descending broadening wedge pattern after the massive move over the previous 2 weeks. 

I will look to SHORT the E/U on any new TS signal, if ‘risk off’ returns and price breaks down from the wedge pattern.  

I will look to LONG the E/U on any new TS signal, if ‘risk on’ returns and price breaks up and out from the wedge pattern. 

E/J: Price was rejected by the bear trend line that dates back to September 2008! Price action is trading just under the daily 200 EMA and weekly pivot and within a trend channel that could be construed as forming a bull flag pattern on the daily chart. The weekly candle was an ‘inside bar’ candle which is viewed as a bullish sign when it appears in an up trend such as on the E/J.

I will look to LONG the E/J on any new TS signal, if ‘risk on’ returns and price breaks up and out from the trading channel.

I will look to SHORT the E/J on any new TS signal, if ‘risk off’ returns and price breaks down from the trading channel.

A/U: Last week. Now, you may call me a slow learner but at least the penny drops with me eventually! The A/U was a bit choppy on the 4 hr this last week. This got me wondering and, then, ultimately searching. You see I never accept that things just go wrong, or awol, I always go looking for a reason...it's the scientist in me. So, the daily Ichimoku cloud charts for the Indices were clear but, then, the Ichimoku Cloud 4 hr showed some potential choppiness looming:
USDX Daily Cloud: clear path

USDX 4hr Cloud: price embedded in the 4 hr cloud and congested and, thus, possibly choppy: 

So, I then thought that I should look more closely at the Ichimoku Cloud chart for the A/U itself. In hindsight this now seems pretty obvious!

A/U Daily Cloud: price action embedded in the daily Cloud and, thus, potentially choppy.

A/U 4hr Cloud: price action embedded in the 4 hr Cloud too and, thus, potentially choppy.

So, even though the average charts of the Indices were clear on the daily Ichimoku time frame, the 4 hr charts showed some potential choppiness might arise. Also, the individual chart for the A/U revealed possible choppiness on both time frames, daily and 4 hr. Reference to these two charts at the beginning of the week would have kept me from trading this pair, irrespective of the TS signal.

In Conclusion: I should look at the individual currency pair Ichimoku Cloud charts, as well as the over average of the indices, when assessing and choosing TS trend trade signals. You may consider this as too limiting by adding extra filters to screen potential TS signals. Trading is as much a matter of keeping out of bad trades as it is in getting into good trades though!

PS: I'm going to update my TS + Ichimoku page with this latest, albeit bleedin' obvious, Epiphany!

A/U This week: There is still a possible bull flag pattern in play on the monthly chart. Price is also trading within a symmetrical triangle on the weekly chart dating back to the middle of last year. As with the E/J, price is trading within a trend channel that could be construed as a bull flag on the daily charts. Plus, last week’s candle is almost an ‘inside bar’ candle as for the E/J. This is a bullish sign. Price is also trading above the 4hr 200 EMA and the monthly pivot which may help to buoy price a bit.

I might SHORT the A/U if ‘risk off’ returns and if price breaks down from the trading channel and out of the cloud. 

I will look to LONG the A/U on any new TS signal, if ‘risk on’ returns and if price breaks up and out from the trading channel and out of the cloud.

A/J: The A/J is also trading in a downward trend channel or possible daily chart bull flag too. Price failed last week to pierce up and hold through the significant S/R level of 83. Last week’s candle here, too, has formed an ‘inside bar’ candle pattern; another bullish pattern. Price is also trading here, too, just above the 4hr 200 EMA and monthly pivot which may help to buoy price.

I might SHORT the A/J if ‘risk off’ returns and price breaks down from the trading channel. 

I will look to LONG the A/J on any new TS signal, if ‘risk on’ returns and if price breaks up and out from the trading channel.

G/U: Price has hardly looked back since closing above the daily 200 EMA and the S/R level of 1.58. Price is supported by a bull trend line (I’ve relaxed this level a bit though) BUT note the indecision Doji candle on the weekly chart and the shooting start reversal candle for last Friday on the daily chart. 

I would look to LONG the G/U on any new TS signal and if ‘risk on’ returns.

I would look to SHORT the G/U on a new TS signal, if ‘risk off’ sentiment returns and if price breaks, closes and holds below the bull trend line. 

USD/SGD: Price has flat lined most of the week. I’m not keen on this pair at the moment. I’ll consider any new TS signals though.

Swissie USD/CHF: Price is trading within what looks like, to me at least, a bearish broadening ascending wedge pattern or even a bear flag pattern. Note the inside style Doji on the Friday daily chart.

I will look to LONG the USD/CHF on a new TS signal, if ‘risk off’ returns and price breaks up and out of the wedge pattern.  

I will look to SHORT the USD/CHF on any new TS signal, if ‘risk on’ returns and if price breaks down from the wedge pattern.  

Loonie:  USD/CAD: Price is also trading on this pair within a trend channel that could be construed as a bear flag on the daily charts.

I will look to LONG the USD/CAD on any new TS signal, if ‘risk off’ returns and if price breaks up and out from the flag pattern.  

I will look to SHORT the USD/CAD on any new TS signal, if ‘risk on’ returns and if price breaks down from the flag pattern.  

Silver: Price has broken out and up from the weekly symmetrical triangle pattern and is still looking quite bullish. Price is up 500 pips since the TS signal although it didn’t move much thisweek!  Note last week's indecision Doji and all of the daily indecision candles from this week!

Gold: Price has broken out and up from the weekly symmetrical triangle pattern and is looking quite bullish. Price is up 1200 pips since the TS signal although it didn’t move much thisweek! Note last week's indecision Doji and all the indecision candles from this week here too!